India Ratings has affirmed IDBI Bank’s long-term ratings at ‘IND AA/Stable’ and short-term ratings at ‘IND A1+’. The ratings reflect the bank’s stable operating buffers in FY25, its robust capital position and improving asset quality. IDBI’s improving operational performance is supported by a stable funding base with a 44.65% CASA ratio in Q1 FY26.
Rating Rationale
India Ratings has reaffirmed IDBI Bank’s ratings at ‘IND AA/Stable’ for long-term and ‘IND A1+’ for short-term debt instruments. The rating agency views IDBI’s stable operating buffers as a key strength, reflecting its ability to sustain market share and absorb potential credit cost increases.
Key Strengths
The affirmation is supported by IDBI Bank’s robust capital position. As of Q1 FY26, the bank reported a 23.71% CET1 ratio. This is further aided by improving internal profit generation. A stable funding base with a high proportion of CASA deposits (44.65% in Q1 FY26) also contributes to the rating.
Asset Quality
IDBI Bank’s asset quality continues to improve. Gross NPAs declined to 2.93%, and net NPAs reduced to 0.21% in Q1 FY26. The bank’s enhanced risk management framework has contributed to the consistent improvement in asset quality. The provision coverage ratio remained robust at 93% in Q1 FY26.
Strategic Focus
IDBI Bank is strategically shifting towards building a more granular and retail-centric loan book. The retail loan share has increased to 70%. This shift is aimed at improving the risk profile and overall yields. The bank has also increased its focus on gold loans, which accounted for 8% of the loan book in FY25.
Liquidity & Profitability
IDBI Bank’s liquidity position is adequate, as reflected by a liquidity coverage ratio of 128.11% in Q1 FY26. Profitability trajectory remains positive, underpinned by healthy net interest margins (NIMs) and low credit costs. The return on assets (RoA) improved to 2% in Q1 FY26.
Source: BSE
